The hospitality sector is buckling under the weight of rising no-shows and last-minute cancellations. With the industry already under pressure from record-high inflation and rising energy prices, the growing number of people not turning up for their booking is causing almost a fifth (18%) of restaurant, pub and bar owners to consider closing for good, according to new data from Barclaycard Payments.

The financial impact of no-shows and last-minute pull-outs means almost a quarter (23%) of restaurant owners and managers consider it one of the biggest issues facing the sector right now. 

The cost of cancellations

The majority (60%) of customers give notice of 24 hours or less when they cancel their booking, but not showing up (alongside calling and cancelling on the day) is the most common form of cancellation method used by consumers (19%). Naturally, this is adding pressure to hospitality businesses and causing issues such as increased food waste (56%), staffing challenges (34%), low team morale and being forced to close early (23%), having to let team members go (22%) and impacts on staff mental health (17%).

Three in 10 of those polled are understandably worried about no-shows negatively impacting profits this summer – only 16% say they can recover loss of earnings through cancellation fees. It comes as those who have experienced no-shows and last-minute cancellations estimate they lose an average of £89 for each customer that doesn’t turn up. 

Food for thought

The data from Barclaycard Payments found that on average, four in 10 owners and managers have seen an increase in no-shows and late cancellations in the last year, by an average of 40 and 35%respectively.

Only 34% of businesses surveyed currently take card details when booking and charge a cancellation fee if a customer doesn't show up. Although, in a bid to change customer behaviour, a further 37% say they plan to introduce this measure.

(Image: rupixen.com/Unsplash)

Other deterrents being employed by the hospitality industry include requiring card details when booking, though not actually charging a fee (43%) and taking an upfront deposit to put customers off not attending (35%). The news comes as 14% of millennial customers (27–42) admit to making ‘bulk bookings’ so they have a choice of where to go out, and then forgetting to cancel the unused reservations, a figure that sits at 12% for the younger generation of 18–26-year-olds. Meanwhile, over eight in 10 (83%) of those aged 59–77 have never not shown up to a restaurant booking.

Cancellation causes

Friends and family members bailing on plans is the top reason customers provide for no-shows, according to over one in 10 (11%). Other reasons include deciding to stay in instead (9%), forgetting about the booking (8%), rain (7%) and lack of a babysitter (5%) or dog sitter (6%). When it comes to methods of cancelling, over a fifth (21%) admit they don’t feel as bad about cancelling if they’ve booked online or via social media as there is no personal interaction. One in five (19%) also say they feel too awkward to speak to someone on the phone to alert the venue to their change in plans. 

Healthy appetites for dining out

Despite the ongoing issue with cancellations, there remains a strong desire to eat out. And with a third (33%) of diners admitting they would be less likely to cancel a booking if they had been asked to pay a deposit, the research highlights clear methods that can reduce the customer cancellation issue. 

British summertime, with its warmer weather and longer days, increases adults’ likelihood to eat out more, according to 51% of those polled. As the summer holidays approach, nearly a fifth (17%) of millennials are planning to dine out more than they have done over the last six months, rising to over a quarter (26%) for the younger audience (aged 18–26).

Tom Aikens, owner of a Michelin-starred restaurant, says: "It’s great to see so many people still looking forward to meals out despite the current climate. At my restaurant Muse, we do everything we can to minimise the impact of cancellations by communicating with the guest through detailed booking confirmations, requesting guests confirm their reservations six days prior and having a strict five-day cancellation policy. Unfortunately, there are still some unavoidable circumstances where this is the case, which leads to challenges such as food wastage, staffing levels and, fundamentally, loss of sales."

Kirsty Morris, MD of Barclaycard Payments, adds: "The hospitality industry has faced challenge after challenge in recent years and is continuing to feel the strain against the backdrop of the cost of living. With longer days and summer holidays around the corner, it’s crucial to the success of many of these businesses that diners understood the impact that not showing up can have; something that seems small to a customer can have a real knock-on effect on a restaurant’s bottom line.

"With more venues considering charging cancellation fees to deter no-shows, we want to help educate diners about the real impact on businesses of cancelling last-minute so they can think ahead and give advance warning – and ensure that the venue has enough time to refill tables, staff accordingly, and get the correct volume of food and drink in stock."

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